**Effective Federal Funds Rate (FFR)**

The rate of interest at which banks borrow reserves from each other. Set by directives of the Federal Open Market Committee. The model uses the monthly average. Stated in percentage points. Source: Federal Reserve report H.15. https://fred.stlouisfed.org/series/FEDFUNDS

**10-Year Treasury Note (10 Year)**

The current yield on the Constant Maturity 10-Year Note. The model uses the monthly average. Stated in percentage points. Source: Federal Reserve report H.15. https://fred.stlouisfed.org/series/DGS10

**20-Year Treasury Bond (20 Year)**

The current yield on the Constant Maturity 20-Year Bond. The model uses the monthly average. Stated in percentage points. Source: Federal Reserve report H.15.

**Official Unemployment Rate (RUC)**

The number of persons unemployed divided by the civilian labor force. Stated in percentage points. Source: Bureau of Labor Statistics Employment Situation Report. https://fred.stlouisfed.org/series/UNRATE

**Short-Term Unemployment Rate (STRUC)**

The number of persons unemployed for less than 27 weeks divided by the civilian labor force. Stated in percentage points. Source: Bureau of Labor Statistics Employment Situation Report.

**Inflation Rate (CPI)**

The year over year percent change in the All Items Consumer Price Index. Stated in percentage points. Source: Bureau of Labor Statistics Consumer Price Index Report. https://fred.stlouisfed.org/series/CPIAUCSL

**Basis Points (BP)**

A unit of measurement. There are 100 Basis Points in one percentage points. Useful in discussing changes in the levels of series that are stated in percentage points.

**Financial Spread (FS)**

The difference between the yield on the 20-Year Treasury Bond and the Effective Federal Reserve Rate. Computed using the formula: **FS = (20-Year minus FFR)*100**. Stated in Basis Points.

**Enhanced Financial Spread (EFS)**

The difference between the yield on the 10-Year Treasury Note and the Effective Federal Reserve Rate. Computed using the formula: **EFS = (10-Year minus FFR)*100**. Stated in Basis Points.

**Real Spread (RS)**

The difference between the inflation rate and the unemployment rate. Computed using the formula **RS = (CPI minus RUC)* 100**. Stated in Basis Points.

**Enhanced Real Spread (ERS)**

The difference between the inflation rate and the short-term unemployment rate. Computed using the formula **ERS = (CPI minus STRUC)* 100**. Stated in Basis Points.

**Aggregate Spread (AS)**

The difference between the Financial Spread and the Real Spread. Computed using the formula **AS = FS minus RS**. Stated in basis points. The Aggregate Spread is the main forecasting tool in the original version of Mr. Model.

**Enhanced Aggregate Spread (EAS)**

The difference between the Enhanced Financial Spread and the Enhanced Real Spread using the formula** EHS = EFS minus ERS. **Stated in Basis Points**. **The Enhanced Aggregate Spread is the main forecasting tool in the current version of Mr. Model.

**Total Private Nonfarm Payrolls**

The number of persons working in the goods-producing and service-providing sectors of the private domestic economy. Reported monthly in the Employment Situation Report by the Bureau of Labor Statistics. The year over year percent change in the total is used. Stated in percentage points. https://fred.stlouisfed.org/series/PAYEMS

**Index of Industrial Production**

A coincident indicator of economic activity. Reported monthly in the G.17 report of the Federal Reserve Board. The year over year percent change in the total index is used. Stated in percentage points. https://fred.stlouisfed.org/series/INDPRO

**DeltaDelta**

A coincident indicator of economic activity. Computed using the formula:

**DeltaDelta = Percent Change from Prior Year Month of the S&P500 Stock Index minus the Percent Change from the Prior Year Month of the Official Unemployment Rate**. Stated in percentage points. For the purposes of this calculation the month-end closing value of the S&P 500 Stock index is used.

**Saint Offset**

The patron saint of economic forecasters.

His two basic maxims are:

“Two wrongs can make a right, but it is not always the same two wrongs.”

“I said ‘maybe’ and that’s final.”